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Second guilty plea in Ireland’s first criminal prosecution involving “gun jumping” in a merger

May 10, 2019

On 10 May 2019, Airfield Villas Limited (Airfield Villas) pleaded guilty in Dublin Metropolitan District Court to illegally putting into effect a business merger without first notifying the Competition and Consumer Protection Commission (CCPC).

Under Irish competition law, mergers or acquisitions, which reach certain financial thresholds in the State, must be notified to the CCPC. Such notifiable mergers or acquisitions cannot be put into effect without obtaining clearance from the CCPC. Failure to notify any such a merger or acquisition, or putting it into effect before clearance by the CCPC, is referred to as “gun-jumping”, which is a criminal offence under Irish law and the transaction is deemed void. This prosecution against Airfield Villas and a co-accused, Armalou Holdings Limited (Armalou Holdings), was the first criminal prosecution taken for gun-jumping in the Irish State.

In 2017, the CCPC commenced an investigation into a suspected failure to notify the CCPC of the acquisition by Armalou Holdings, through its wholly-owned direct subsidiary Spirit Ford Limited, of the entire issued share capital and thus sole control of Lillis-O’Donnell Motor Company Limited. The vendor of Lillis-O’Donnell Motor Company at the time was Lillis-O’Donnell Holdings Limited, which subsequently changed its name to Airfield Villas. After an extensive investigation involving the gathering of a significant amount of documentation and analysis, the CCPC referred a file to the Director of Public Prosecutions (DPP) concerning the parties’ conduct for failing to notify a notifiable transaction before putting it into effect.

On 8 April 2019 a co-accused, Armalou Holdings, had pleaded guilty to six charges arising out of a failure to notify the CCPC of the acquisition, prior to putting the transaction into effect on 3 December 2015.

Airfield Villas also pleaded guilty to six charges arising out of its failure to notify the CCPC of the transaction prior to putting it into effect on 3 December 2015. Judge Halpin was satisfied that, similar to its co-accused, Armalou Holdings, Airfield Villas was unaware of its obligations and that it was not a wilful breach of the law, and indicated that, in those circumstances, he would apply the Probation Act 1907 if Airfield Villas made a charitable donation of €2,000 to a specified charity.

Judge Halpin stressed that it was a very serious case and he said it was essential that there is a body [like the CCPC] patrolling this area in order to prevent interference with the market. Judge Halpin ordered each of Armalou Holdings and Airfield Villas to pay a €2,000 contribution to the DPP’s costs and witness expenses to the CCPC before 30 May 2019.

Background information

In August 2017, the CCPC was informed that Armalou Holdings Limited, through its subsidiary Spirit Ford Limited, may have acquired Lillis O’Donnell Motor Company Limited without first notifying the acquisition to the CCPC.

Section 18(1) of the Competition Act 2002 (the Act) requires that proposed mergers or acquisitions between businesses operating in the State, which meet certain turnover thresholds, must be notified to the CCPC.

Under section 19(1) of the Act, any proposed merger or acquisition that is required to be notified to the CCPC shall not be put into effect until the CCPC has made a determination in relation to such merger or acquisition. If a proposed merger or acquisition is put into effect in contravention of section 19(1) of the Act, such a merger or acquisition is void under section 19(2) of the Act.

The CCPC commenced an investigation in October 2017 into the suspected breach of the notification requirements under section 18(1) of the Act, which is an offence under section 18(9) of the Act.

Merging parties found guilty can be subject to fines of up to €3,000 (on summary conviction) and €250,000 (on conviction on indictment) and in addition daily fines for each subsequent day the transaction is not notified may be applied.

On 9 February 2018, the acquisition by Armalou Holdings Limited, through its wholly-owned subsidiary, Spirit Ford Limited, of Lillis-O’Donnell Motor Company Limited was notified to the CCPC. The acquisition was put into effect in December 2015 without first being notified to the CCPC. The CCPC accepted the notification and proceeded to review the notification in accordance with the relevant provisions of the Act. Subsequently the transaction was cleared on 23 March 2018.

Information on the DPP V Armalou Holdings Limited case, which was heard on 8 April 2019, can be found here.